Governor Beshear Offers Tax Overhaul Plan

FRANKFORT, Ky. (WBKO) -- It's a plan that started two years ago with the Blue Ribbon Tax Commission and today Governor Beshear unveiled that tax reform plan for all of Kentucky.

The main principal of this Kentucky Competes plan is lower rates, but broader base.

"Kentucky deserves better and it needs better to compete for 21st century jobs and create 21st century businesses," said Gov. Steve Beshear D-Kentucky.

Beshear's proposal makes 22 different changes.

Here are some of the highlights:

It lowers individual income tax rates from 6% to 5.9% and reduce the number of rate brackets. Rates would be 5.5% to 5.75% for those who make between $10,000 and $100,000.

"Every Kentuckian will benefit from this change when it's coupled with the current family sized tax credit, a newly established state earned income tax credit, and a new whole harmless credit," said Beshear.

That new earned income tax credit is 7.5% of the federal credit, so low wage earners are helped.

Another aspect of Beshear's plan that generates revenue is getting rid of a retirement exclusion for higher income retirement earners.

"This change does not affect adjusted gross incomes of less than $80,000 a year. So elderly people with fixed incomes are not affected by this proposal," said Beshear.

Governor Beshear's proposal would create about $210 million when it gets going.

"I'm in favor of revenue neutral tax reform. Tax raises are not something I typically support, really ever support. I think this legislation is a conversation starter, what the Governor has rolled out and I commend him for his leadership on that," said Rep. Jim DeCesare, R-Rockfield.

There's a good chance Governor Beshear's tax proposal will look a lot different as republicans and democrats in the House and Senate get to look at it.

Beshear's plan also raises the cigarette tax by 40 cents to $1.00 and adds a new tax for e-cigarettes.

Select services like labor costs for an auto repair shop will also start to see a sales tax.

Those aren't the only ones though either, gyms, golf courses and country clubs would also start using the sales tax.

For more on all the tax breaks and new taxes you can go to the link in this story for Beshear's Kentucky Competes plan.

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